Centrica, Bayerngas Norge to create E&P joint venture

Centrica and Stadtwerke Munchen GmbH reached an agreement to combine Centrica’s European oil and gas exploration and production (E&P) business with Bayerngas Norge, Centrica announced on Monday.

The deal is to form a newly incorporated joint venture and create a leading independent European E&P company, the statement read.

The U.K.-based company noted that the joint venture will have two shareholding entities.

"Centrica will own 69 percent and Bayerngas Norge’s existing shareholders, led by SWM and Bayerngas GmbH, will own 31 percent," it explained.

The effective date of the transaction is Jan. 1, 2017, with planned closure in the fourth quarter of 2017, subject to competition and regulatory approvals and other conditions, according to Centrica.

“As part of our strategy of 2015, we have been aiming to develop a more focused and stronger E&P business, which will contribute to the resilience of the Group while limiting Centrica’s E&P participation," Iain Conn, group chief executive of Centrica, was quoted as saying.

He added that the deal creates a larger, more sustainable and more capable European E&P business and brings together like-minded shareholders who have a shared strategic vision on the role of E&P.

“As one of the largest independent E&P companies in northwest Europe, the new entity will have the possibility to participate in further consolidation and joint ventures, and creates future optionality for Centrica’s shareholders,” he concluded.

The joint venture will comprise Centrica’s assets in the U.K., Netherlands and Norway and Bayerngas Norge’s assets in the U.K., Norway and Denmark.

The portfolio will be gas weighted, with approximately 66 percent of total reserves and resources comprising natural gas, the company added.